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Issuance of bonds create a win-win situation for all parties
involved. Bonds benefit the borrower, the investors and the communities
in which the projects are located.
Due
to the tax-exempt status of bonds, investors benefit from the tax-free
interest earnings received from the bonds. The interest income may
be lower than other investments, but the tax savings may offset
the difference.
The
renovation of abandoned and deteriorating buildings, as well as
the development of underutilized land revitalizes the surrounding
community. The growth in business resulting from bond proceeds allow
for the creation of jobs that are usually filled by local residents.
Over
the past ten years, the "all-in" interest rate has averaged
approximately 4.65%. During this same period, the bond interest
rate was as low as 2.8% and the commercial interest rate indicators
have consistently been higher than the tax-exempt interest rates.
Bonds
typically reduce financing costs by 20% - 30% annually. In many
cases these savings allow companies to purchase their leased facility
or acquire a new property, allowing them to expand and increase
the capacity of their operations.
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